THE STOCKHOLDERS' AGREEMENT INDEMNITY. (a) Subject to the limitations set forth in this Section 2.2, each Stockholder hereby agrees to indemnify, defend and hold harmless AAI and its subsidiaries (including KCAS after the Closing) and their directors, officers, employees and agents (together, the "Indemnified Buyer Parties") from and against all demands, claims, actions, losses, damages, liabilities, penalties, taxes, costs and expenses (including, without limitation, attorneys' fees, settlement costs, arbitration costs and any reasonable legal and other expenses for investigating or defending any action or threatened action) asserted against or incurred by any of the Indemnified Buyer Parties arising out of or in connection with or resulting from (i) a misrepresentation, breach, or nonfulfillment of any covenant, agreement, representation or warranty of KCAS contained in the Merger Agreement or in any agreement or instrument executed and delivered by KCAS on or prior to Closing pursuant to the Merger Agreement, (ii) state sales or use taxes that may be owed by KCAS for transactions occurring prior to November 1, 1997, (iii) the employment discrimination claim identified in Schedules 5.5 and 5.16(a) to the Merger Agreement, (iv) the potential environmental remediation identified in Schedule 5.21(d) to the Merger Agreement and (v) the threatened litigation identified in Schedule 5.16 to the Merger Agreement (collectively, "Buyer's Damages"). For all purposes hereunder, the amount of Buyer's Damages shall be computed net of the present value of any income tax benefit actually resulting therefrom to AAI and the present value of any proceeds actually paid to KCAS or AAI under any insurance coverage with respect thereto obtained by KCAS prior to the date hereof that reduces Buyer's Damages that would otherwise be sustained.
